EY has “paused” its plan to split in two amid a fierce dispute over how much of its tax business should stay with the audit side of the firm.
Julie Boland, the head of EY’s US business, who has been picked to run EY after it spins off its consulting arm, told partners on a call on Wednesday that the deal needed to be reworked, according to people familiar with the matter.
The US business accounts for about 40 per cent of EY’s $45 billion (€42.7 billion) in annual global revenues, giving it very strong negotiating power in internal talks over the split.
EY had planned to spin off the majority of its tax practice into a new group containing consulting and other advisory service lines, leaving only a minority of its tax experts in the audit-dominated firm after the separation.
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However, auditors in the US have been campaigning for a larger portion of the tax practice to be retained within the audit arm after the split, people with knowledge of the matter said.
EY said in a statement: “As part of our deliberation and due diligence in connection with the proposed transaction, we are engaging in a dialogue with the largest EY country member firms to determine the final shape of the transaction.
“This transaction is complex and will be the road map for the reshaping the profession, so it is important we get this right. We remain committed to the strategic rationale that underpins Project Everest and believe that a deal can and should be done.” Copyright The Financial Times Limited 2023
